Treasury, IRS Finalize Roth 401(k) Rules

The Treasury Department and the Internal Revenue Service have issued final regulations regarding Sections 401(k) and 401(m) related to designated Roth IRA contributions.Roth contributions were added to the code by the Economic Growth and Tax Relief Reconciliation Act of 2001, and are effective for taxable years beginning after Dec. 31, 2005.

Designated Roth contributions allow for employees to designate all or a portion of their section 401(k) employee deferrals as Roth contributions, which would receive treatment similar to a Roth IRA contribution, where they would be contributed on an after-tax basis, but qualified distributions of those contributions, plus earnings, would be tax-free.

The regulations can be accessed at: http://www.treasury.gov/press/releases/js3068.htm